Prime Minister John Key says John Banks' resignation as a government minister will not force him to call a snap election.

Banks quit as a government minister this afternoon after a judge ordered him to stand trial over allegedly knowingly filing a false electoral return. He will stay on as ACT leader and Epsom MP.

The private prosecution was brought over donations made to his 2010 bid for the Auckland mayoralty by SkyCity and Kim Dotcom.

The casino gave $15,000 and the internet mogul two donations, each of $25,000. These were declared anonymously.

In the private prosecution brought by retired accountant Graham MCready it was claimed Banks knew the donations were not made anonymously and designating them as such was against the law.

Banks has pleaded not guilty.

He was the second of National's coalition partners to quit this year after UnitedFuture leader Peter Dunne stood down in June.

Key denied the donations saga would rock the stability of his government.

''In essence today the National government has lost a minister from one of our support parties, but the Government hasn't lost any ballast in terms of its overall voting majority... we won't be having a snap election.''

He praised Banks as ''good, hardworking, diligent and reliable'' a ''credible'' and ''trustworthy'' individual.

But he said it was not possible for him to stay on as a minister while he faced court action.

Banks has yet to decide whether to take an appeal to the High Court or contest the matter in the District Court.

''If he was to appeal to the High Court and they were to appeal the District Court's ruling this afternoon, or if he was to go through the court case and successfully defend, it would be my expectation that he will be returned as a minister.''

Banks told Key's chief of staff Wayne Eagleson on Friday that he planned to resign if he was committed to trial.

Key was on his way back from the East Asia Summit in Brunei.

''I wanted to have a direct conversation with Mr Banks... me as prime minister to my minister.''

He wouldn't be drawn on whether he would have sacked Banks if he hadn't offered to go, saying it was ''hypothetical''.

''I think Mr Banks has made the right call. He could have argued that he was going to guts it out because he argued strongly that he is innocent.

''But realistically for a minister to be in government and defending, potentially, a fraud charge, I think he made the right decision.''

There will be no reshuffle as Key intended to give the portfolios back to Banks if he was cleared.

Opposition parties have said it was a conflict of interest for Banks to vote on Sky City legislation as CEO Nigel Morrison would be a key witness.

Key said this was a matter for Banks, but said: ''I can't see for the life of me why he should abstain... the information... has been in the public domain for a long time... to me it is just another public stunt for the Greens and I for one will be voting.''

Labour leader David Cunliffe said Banks should have gone a year ago and Key "should have read that police report instead of burying his head in the sand".

The prime minister had already spent a "truckload" of political capital on Banks, he said, and this was "the kind of behaviour that the public can't stand and Mr Key is going to pay for it in the polls if he continues to sanction it".

Key denied he has expended political capital defending Banks.

''My view is that he obeyed the law in terms as it stood in 2010... there were actions he took before he was a minister.. .I'm not going to find someone guilty, it's not my responsibility to do that unless they have actually done something.''

Key still hasn't read the police file on the case, released last year after police decided not to prosecute.

''I accepted him at his word,'' he said.

The trial was not likely to take place until at least September next year.

CHARGES DENIED

Banks has been remanded at large until he reappears in court in December. A not-guilty plea was entered by Banks' lawyer, David Jones, QC.

Jones yesterday argued that his client should be discharged. Banks had had no knowledge donors had been listed as anonymous on a donation return form because he hadn't read the form before signing it.

"It was simply impossible for him to know how donations were recorded," Jones told the court yesterday.

The man in charge of the campaign's finances, who has name suppression, said although Banks was the biggest contributor to the campaign, he had little to do with the finances.